Several NPCs in Neriak Third Gate are tiny
 

The following NPCs in Neriak Third Gate (all in the Cleric Guild Hall) are baby-sized:

Jacum C`Luzz
Eruvin T`Kix
Jabon T`Kix
Dvis Zexus

There may be more, but these were the ones I could find in the area.

They're normally fine. Maybe someone was bored and charmed them and shrunk them.

indignation were living there for a while hoping for verina to pop. (shamans, chanters etc). so def what byrjun said